Correlation Between HP and Teb Bancorp
Can any of the company-specific risk be diversified away by investing in both HP and Teb Bancorp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining HP and Teb Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and Teb Bancorp, you can compare the effects of market volatilities on HP and Teb Bancorp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in HP with a short position of Teb Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and Teb Bancorp.
Diversification Opportunities for HP and Teb Bancorp
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HP and Teb is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Teb Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teb Bancorp and HP is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on HP Inc are associated (or correlated) with Teb Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teb Bancorp has no effect on the direction of HP i.e., HP and Teb Bancorp go up and down completely randomly.
Pair Corralation between HP and Teb Bancorp
Considering the 90-day investment horizon HP Inc is expected to under-perform the Teb Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, HP Inc is 4.52 times less risky than Teb Bancorp. The stock trades about -0.26 of its potential returns per unit of risk. The Teb Bancorp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 720.00 in Teb Bancorp on November 7, 2024 and sell it today you would lose (30.00) from holding Teb Bancorp or give up 4.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
HP Inc vs. Teb Bancorp
Performance |
| Timeline |
| HP Inc |
| Teb Bancorp |
HP and Teb Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and Teb Bancorp
The main advantage of trading using opposite HP and Teb Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, Teb Bancorp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Teb Bancorp will offset losses from the drop in Teb Bancorp's long position.The idea behind HP Inc and Teb Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Teb Bancorp vs. Sound Financial Bancorp | Teb Bancorp vs. Finward Bancorp | Teb Bancorp vs. Franklin Financial Services | Teb Bancorp vs. Community West Bancshares |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the CEOs Directory module to screen CEOs from public companies around the world.
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